Order for further and better discovery

Summary

The Commissioner considered the list of documents prepared by the plaintiff was deficient and made an application for further and better discovery, which was granted.

Facts

In September 2004, the Commissioner learned that the plaintiff was in the process of selling a commercial building. He considered the profit to be assessable income, on the grounds that the plaintiff was associated with particular persons who, at the relevant time, were in the business of dealing in or developing land.

The husband of the sole director and shareholder of the plaintiff ran an unsuccessful property development and dealing business through a string of companies which failed, leaving the department millions of dollars out of pocket. The Commissioner believed the plaintiff was also about to discontinue business, and would strip itself of its assets and then leave behind yet another large tax debt. He consequently issued a special assessment against the plaintiff under section 44 of the Tax Administration Act 1994, and issued notices under section 157 to collect the tax. The plaintiff responded with a challenge proceeding. Lists of documents were exchanged. The Commissioner disclosed an extensive list and considered documents to be missing from the plaintiff’s list. Consequently, the Commissioner made an application for further and better discovery under r 300 of the High Court Rules 1986.

During the hearing of the application, the plaintiff withdrew its challenge to the validity of the special assessment and conceded that the husband was associated to the plaintiff. This meant it was no longer necessary to obtain an order for discovery of documents relevant to those issues.

Decision

The Court found that all requirements were made out and granted the order sought.